McClintock is not concerned that his actions could result in another Great Recession and your financial security would be at risk!

by Susan Ashby

The Republican-dominated House recently passed HR10, the Financial Choice Act.  The vote was 233 Yea (all Republicans) and 185 Nay (all Democrats).  McClintock co-sponsored this bill and voted yea for passage on June 8.

If the bill becomes law, “it will represent a huge defeat for the American public and increase the possibility of another financial crisis” said Rep. Jim Himes, D-4th District.  “The Financial Choice Act attempts to undo all of the protections we have instituted… It strips power away from the (Securities and Exchange Commission) and the Consumer Financial Protection Bureau; makes it easier for banks to gamble with taxpayer money …”

https://ctmirror.org/2017/06/02/u-s-house-ready-to-gut-dodd-frank-wall-street-reforms/

“This is a dangerous piece of legislation…”   This bill would repeat recent history and put Americans at risk of losing millions by taking “referees off the field.”  Said Steny Hoyer, the House minority whip said on the House floor on Thursday.

http://money.cnn.com/2017/06/08/news/economy/house-dodd-frank-repeal/index.html

Background:

The financial crisis happened because: 

  1. Banks created too much money too quickly. Every time a bank makes a loan, new money is created. In the run up to the financial crisis, banks created huge sums of new money by making loans. In just 7 years, they doubled the amount of money and debt in the economy.
  2. They used this money to push up house prices and speculate on financial markets. Just 8% of all the money (billions) that banks created from 2000-2007 went to businesses outside the financial sector.
  3. Eventually the debts became unpayable.  Lending large sums of money into the property market pushes up the price of houses along with the level of personal debt. Interest has to be paid on all the loans that banks make, and with the debt rising quicker than incomes, eventually some people become unable to keep up with repayments. At this point, they stop repaying their loans, and banks find themselves in danger of going bankrupt.
  4. This process caused the financial crisis. Straight after the crisis, banks limited their new lending to businesses and households. The slowdown in lending caused prices in these markets to drop, and this means those that have borrowed too much to speculate on rising prices had to sell their assets in order to repay their loans. House prices dropped and the bubble burst. As a result, banks panicked and cut lending even further. A downward spiral thus begins and the economy tips into recession.
    http://positivemoney.org/issues/recessions-crisis/

 

In response to the financial crisis of 2007-2008, the Dodd-Frank Wall Street Reform and Consumer Protection Act was passed in 2010.

  • The Act’s numerous provisions are being implemented over a period of several years and are intended to decrease various risks in the U.S. financial system. The Act established a number of new government agencies tasked with overseeing various components of the Act and by extension various aspects of the banking system.
  • A key component of Dodd-Frank, the Volcker Rule(Title VI of the Act), restricts the ways banks can invest, limiting speculative trading and eliminating proprietary trading. Effectively separating the investment and commercial functions of a bank, the Volcker Rule strongly curtails an institution’s ability to employ risk-on trading techniques and strategies when also servicing clients as a depository. Banks are not allowed to be involved with hedge funds or private equity firms, as these kinds of businesses are considered too risky.

http://www.investopedia.com/terms/d/dodd-frank-financial-regulatory-reform-bill.asp

 

What does HR 10 do to the Dodd-Frank Act provisions?

  • Repeals the “Volcker Rule.”
  • Repeals a the provision requiring the Board of Governors to prescribe capital adequacy and other risk management standards for supervised securities holding companies
  • Repeals the Consumer Law Enforcement Agency’s authority to monitor for risks to consumers in the offering or provision of consumer financial products or services, including developments in markets for such products or services.
  • Repeals the Consumer Law Enforcement Agency’s supervisory authority over financial institutions and limits the agency’s authority to take action against entities for abusive practices.
  • Repeals the Department of Labor fiduciary rule which gives SEC the authority to impose a fiduciary duty on brokers who give investment advice –the advice must be in the best interest of their customers.
  • Repeals the section of Dodd-Frank that provides limitations on fees that may be charged to retailers for debit card processing

https://votesmart.org/bill/22915/59632/9715/financial-choice-act-of-2017#.WVU6xY4rKUk

“It’s a bill that’s so harmful to vast swaths of the American public if it became law… It would make it easier for predatory lenders to rip people off. It would make it easier for Wall Street to keep taking $17 billion out of retirees’ pockets by repealing the fiduciary rule. It would make it easier for big Wall Street banks to take the kind of risks in pursuit of short-term gains that go directly to the pockets of the tiny handful of people at the top that led to the financial crisis.” said Lisa Donner, executive director of Americans for Financial Reform.

https://www.nytimes.com/2017/06/08/business/dealbook/house-financial-regulations-dodd-frank.html

 “It’s shameful that Republicans have voted to do the bidding of Wall Street at the expense of Main Street and our economy,” said Maxine Waters, currently the top Democrat on the House Financial Services Committee.

http://money.cnn.com/2017/06/08/news/economy/house-dodd-frank-repeal/index.html

“The Wrong Choice Act is … an invitation for another Great Recession, or worse,” said California Rep. Maxine Waters.

http://www.npr.org/2017/06/08/532036374/house-passes-bill-aimed-at-reversing-dodd-frank-financial-regulations

 

Remember,   your representative in the House, Tom McClintock voted for this bill.  We need to replace him with someone who cares about our financial security!